State high court upholds Sound Transit vehicle excise tax

OLYMPIA — The state Supreme Court delivered a huge win to Sound Transit on Thursday, upholding provisions of a law that allows the regional transit authority to collect hundreds of millions of dollars in vehicle-license taxes that voters approved in 2016 for mass transit.

In a 7-2 decision, the court concluded that while the law references two different depreciation schedules drafted years apart, it “properly adopts both schedules” and “does not require a reader to conduct research” to figure out which will be in force.

“We hold the MVET statute is constitutional,” wrote Justice Susan Owens for the majority, referring to the motor vehicle excise tax.

Justices were considering the case of seven residents, including three from Snohomish County, who sought to erase the rate hike — approved by voters to pay for the $54 billion Sound Transit 3 expansion — and refund hundreds of millions of dollars collected from it thus far.

“Obviously it is a disappointing result for us,” said Attorney Joel Ard of Bainbridge Island, who represented the taxpayers.

Sound Transit attorneys had said that rolling back the fee would have resulted in the loss of billions of dollars in collections and a “drastic impact” on the authority’s ability to build voter-approved ST3 projects. That threat is now gone.

“We are pleased with the decision,” said Sound Transit spokesman Geoff Patrick. “We are pleased the court held that the depreciation schedule to be used was readily ascertainable from reading the statute.”

Sound Transit 3 aims to build 62 miles of new light rail, reaching Everett, Tacoma, new neighborhoods in Seattle and fast-growing cities to the east, including Kirkland and Redmond. It passed on the strength of support in Snohomish and King counties. It was rejected by voters in Pierce County.

Part of the plan’s financing package includes a 0.8% increase in the excise tax rate — from 0.3% to 1.1%.

Sound Transit calibrates car-tab fees using that excise tax rate and a vehicle depreciation schedule drawn up in the late 1990s that overvalues vehicles. In 2006, lawmakers drew up a new depreciation schedule that better reflects a car’s actual value.

A 2015 law that enabled Sound Transit to put its expansion plan on the ballot also permitted the transit agency to keep using the older vehicle valuation schedule until 2028. That’s when original bonds sold using the older valuation are scheduled to expire. At that point, Sound Transit is required to switch to the other depreciation schedule.

The plaintiff taxpayers argued that the rise in the MVET rate approved by voters must be repealed because that 2015 law was unconstitutional.

They contended it violated a provision which, in pursuit of clarity, calls for changes in existing law to be spelled out “at full length.” In this case, lawmakers should have included the complete text of the depreciation schedules but did not.

The law “provided inadequate guidance to legislators, voters, and future taxpayers of the taxes authorized by this statute,” the plaintiffs argued in court papers. And, they wrote, “even the most diligent search” would not reveal the actual valuation schedule to be used by Sound Transit.

But the court rejected those arguments.

“The MVET statute specifically states in which circumstance each depreciation schedule will apply,” Owens wrote. “It does not matter if the legislature set forth two depreciation schedules for different circumstances and made the current depreciation schedule inapplicable for a period of time because it remains clear to the reader when each depreciation schedule will apply, and that is what article II, section 37 requires. Because the legislature clearly laid out when each schedule will apply, there is no confusion or ambiguity arising from the text of the statute itself.”

Two Supreme Court justices signed a strongly worded dissent. The law’s failure to include the depreciation schedules and its incorporation of material from existing and outdated statutes creates confusion, not the clarity demanded by the state’s constitution, wrote Justice Sheryl Gordon McCloud.

“This history of motor vehicle excise tax in Washington is not easy to follow. The statutes have been amended, repealed, and reenacted by both the legislature and the people, and we have invalidated portions of those enactments and repeals as unconstitutional,” she wrote. “The legislature’s latest attempt in 2015 … further confuses things.”

Ard and attorney David DeWolf of Spokane filed the suit on behalf of the seven residents, who include Roger and Mary Struthers of Mukilteo and Frank Maietto of Snohomish.